Investment Column: Torex
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TOREX, which has converted itself from a tool hire business into an IT services, has been re-rated this year in line with its new support services peers. In October the shares languished at 70p; before yesterday's results they topped 294.5p.
The success is founded on acquisitions bolted on to a core IT services business supplying doctors and retailers. has 3000 GP clients and claims there's scope to acquire other suppliers servicing the UK's other 7000 GPs. In cash tills, targets the smaller retail chains, such as Argos and Co-op, which the likes of ICL and Siemens neglect.
Once nets a customer, chances are it will enjoy repeat business because switching to an alternative IT provider is both costly and risky, especially when medical records are at stake.
But to sustain its over-20 per cent earnings per share growth, it will need to find more acquisitions like the once poorly-managed Meditel, acquired last month and from which it is cutting half the workforce. That will not be easy, and the natural customer inertia in the medical business also makes winning new business a challenge.
Analysts expect pre-tax profits of pounds 5.2m and earnings of 11.5p per share this year. At 280p, the shares are fully valued and investors should consider taking profits.
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